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FOLLOWING THE PROPOSALS ON BANKING STANDARDS MADE BY SIR RICHARD LAMBERT, THE INDUSTRY MUST STRIVE TO PRESERVE HIS VISION, SAYS RUTH MARTIN

Doing the Lambert Walk

There is a visionary goal, then a tone of wistfulness and, finally, a plan – but with all the potential flaws resulting from a difficult compromise – in the report from Sir Richard Lambert FCSI (Hon).

The goal of making banking a profession is one we can all endorse as being in the public interest, particularly with the continuing public distrust of banks and bankers.

The wistfulness of noting that, years ago, banking qualifications and professional membership across the sector were the norm, and that something precious was lost in the boom decades up to 2008, is a reminder that professionalism, once achieved, should not be diluted. As members of a professional body, we all know that integrity, once gained, should never be compromised.

While the CISI has significant numbers of exam candidates who work in banking, we recognise that true professionals not only take exams, but also sign up to a code of conduct, maintain their competence once acquired and take care how they conduct themselves in and out of the workplace. We believe that is what professionalism means and, ultimately, that seems to be the way in which Lambert envisages banking should become a profession.

So, if Lambert is recommending an individual membership body, will he build on what we already have and recognise that the different professional bodies already offer much of what he sees as vital in the long term, or travel the long and difficult road of seeking to duplicate or merge?

Speaking after the launch, Sir Richard said: “Moving to individual members over time would enhance the body’s sustainability… in terms of funding, and stress the importance of individual responsibility.” He hopes that senior staff will sign up to the body.

Ruth Martin
Ruth Martin

However, we perceive a hint of reinventing the wheel at this point: shouldn’t banks be encouraging their staff to become members of a relevant professional body already in existence?

The plan, therefore, contains some flaws. On the one hand, we applaud the stated desire to work with the existing professional bodies. On the other, it is clear that Sir Richard ultimately envisages a body of individual membership, and therefore a potentially divisive vehicle if he wishes to keep existing bodies on board.

Six key professional bodies are involved in the review. They broadly welcome the higher standards, but there is confusion over why Lambert hasn’t mandated membership of the existing bodies. CISI Chief Executive Simon Culhane, Chartered FCSI says: “It is a shame that Lambert has stopped halfway when he could so easily have mandated membership of a relevant professional body, which means there is competition, and so very quickly achieved a demonstrable step change. As it is, I’m still unsure whether this new body is a cheerleader for higher standards or a potential competitor.”

The plan also has some flawless arguments: to have an independent board, which benchmarks standards across the whole sector, is a vision we endorse wholeheartedly. Applying self-regulatory zeal to both UK institutions and those foreign banks trading here will demonstrate a commitment from those banks that they intend to take ownership of the issues, sign up to a new culture and deliver tangible improvement.

Yet one of the strengths of professional bodies is that they exist to instil high ethical standards, irrespective of the might of any particular employing institution. Mark Bogard, Chief Executive of the National Counties Building Society, simply commented on the Lambert report by quoting the 19th-century social philosopher Peter Kropotkin, who would ask “whose ethics?”.

It will therefore be particularly important for the new body to prove its independence from the banks and building societies that will be paying for it, by setting a clear limit on the number of board members who may have links with the board of the new body. This will allay fears that it is a sub-branch of the British Bankers’ Association. Consumer groups should also be represented, with perhaps one position allocated to a journalist.

The CISI supports initiatives that will restore trust and raise standards, and seeks to collaborate and partner with a wide range of institutions in doing so. Our concern is that an initially clear vision will be clouded by the establishment of a delivery vehicle that sets aside the good already being done in this area, and seeks to replicate it with a new idea. For example, why not encourage banks to sign up to the CISI/Institute of Business Ethics Investing in Integrity charter mark, or mandate the CISI’s existing individual integrity programmes?

Ruth Martin is Managing Director of the Chartered Institute for Securities & Investment (CISI) and Chair of the professionalism stream at Professions for Good, a collaboration of the bodies responsible for entry policy, professional standards and qualifications across many of the UK’s largest professions.

Lambert in 20 seconds

Sir Richard’s proposed new organisation, whose aim is to raise standards in banking, would be open to all banks and building societies in the UK, acting as an independent champion for better banking standards. Participating banks and building societies would commit to a programme of better standards, covering both conduct and competence, and would agree to report publicly on their progress each year.

The first task would be to define standards of good conduct that would be built on – and closely aligned with – the general principles being developed by the regulators. The new organisation would then work with individual banks and building societies to help drive these standards into all business activities. Over time, it would define the standards of competence that are required in specific roles in banking. This would be done by panels of industry practitioners.

The full text of the paper, including the 19 questions and the CISI’s response, is available at cisi.org/lambert.

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